Report: 12 AMP power customers in Ohio to pay $135 million extra

Dan Gearino, The Columbus Dispatch

Wednesday

Aug 29, 2012 at 12:01 AMAug 29, 2012 at 5:56 PM

A dozen Ohio communities will pay a premium totaling $135 million for electricity because of contracts with an Illinois power plant, according to a new report. The figure is an estimate of how much money the cities and villages – including Cleveland, Bowling Green and Galion – will pay for power in excess of market prices between now and 2025. Residents in those places are paying for Prairie State Energy Campus in southwestern Illinois, a coal-fired power plant that began operating this summer. American Municipal Power of Columbus owns 23 percent of the plant and has sold shares to 60 of its member communities in Ohio.

A dozen Ohio communities will pay a premium totaling $135 million for electricity because of contracts with an Illinois power plant, according to a new report.

The figure is an estimate of how much money the cities – including Cleveland, Bowling Green and Galion – will pay for power in excess of market prices between now and 2025.

Residents in those places are paying for Prairie State Energy Campus in southwestern Illinois, a coal-fired power plant that began operating this summer. American Municipal Power of Columbus owns 23 percent of the plant and has sold shares to 60 of its member communities in Ohio.

“Participation in the Prairie State project has created and will continue for the long term to create significant fiscal problems and stresses for the participating communities,” said the report, issued today by the Institute for Energy Economics and Financial Analysis, a pro-environment group that looks at the finances of the coal industry.

The report’s authors say the dollar figure is a conservative estimate based on disclosures about Prairie State and forecasts of market prices. They did not specify how the costs may affect customer rates, because those decisions are based on factors that can vary considerably from city to city. As with any estimate, the actual outcome could be much different from the report’s conclusions.

Galion, in Crawford County, is the participant closest to central Ohio. It purchased 10 megawatts from Prairie State and faces an excess cost of $8 million, the report says.

“In hindsight, it is clear that municipal utilities should not be involved in risky utility speculation,” said Roberta Wade, a Galion City Council member. She made the comments in a conference call organized by the group behind the report.

AMP did not have an immediate response. Previously, the company’s executives have said they are confident that investing in Prairie State is in the best interests of its members, and that the long-term benefits will outweigh any concerns.

Environmentalists have been critical of Prairie State because it uses coal at a time when the rest of the electric power industry is moving to use more natural gas and renewable energy. The Energy Information Administration reports that Prairie State was the only new coal plant in the country to come online so far this year.

The plant was started by Peabody Energy, a coal company, which then sold nearly all of its interest to municipal-power companies in several Midwestern states. AMP, which provides power to city-owned utilities, owns the largest share.

In Ohio, the 12 communities with the largest investments in Prairie State will pay a premium of $135 million, the report says.

Bowling Green and Hamilton bought the largest shares, with 35 megawatts each. They will pay $27 million each for power in excess of market prices, according to the report.

Cleveland, which bought 20 megawatts, will pay $19 million.

In April, the Dispatch reported about how the plant was behind schedule, over budget, and would sell power for prices in excess of the cost on the market. Supporters of the plant got cities to buy into the deal by saying it would produce power as stable prices that would often be lower than the market.

dgearino@dispatch.com

@dispatchenergy

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